Wednesday, 27 February 2013 12:25
A fall in commodity prices in the second half of 2012 contributed to a decline in construction activity in the final three months of the year.
Figures released by the Australian Bureau of Statistics show total construction work done in Australia fell 0.1 per cent in the December quarter.
St George economist Janu Chan said the overall decline in the sector was due to a 1.3 per cent fall in engineering construction which includes mines, roads, bridges.
She said a sharp drop in commodity prices in the second half of the year would have contributed to the decline.
She said the slide came after a period of strong growth in engineering construction, which was up 19.5 per cent in the year to December.
“I guess it's providing evidence it is softening and it does relate to weaker commodity prices coming off,” she said.
“There is still quite a lot of (engineering) work in the pipeline, but that growth is easing off.”
Ms Chan said the figures also showed a rise in both residential and non-residential construction, which were up 1.7 and 2.0 per cent in the quarter.
“There were some quite healthy gains in those sectors so that was encouraging.”
Engineering work done fell 1.3 per cent in the December quarter after posting solid gains in the previous three quarters.
JP Morgan economist Tom Kennedy said the result signals a slowing down in construction of mining and resource projects.
“It was not a fantastic result,” he said.
“The peak in mining investment, seems it will occur sometime over the coming quarters.
“You can't read too much into this, but it definitely is a step down.”
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